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Amazon, the great disintermediator that put a spanner — in fact, a set of 25 spanners in a handy case, yours for just $9.99 — in the businesses of many a retailer, is going to face exactly the same fate if it doesn’t start to address its weaknesses soon, particularly in the area of publishing. In an article looking at trends for 2013, I told the The Guardian’s Jemima Kiss:

“Amazon is ripe for disintermediation itself, having done that to bookstores, publishers and distributors, so some plucky publishing startups will start to push Amazon to the sidelines," says Charman-Anderson. "As soon as consumers feel they have a sensible choice, they will go for it."

I was challenged on Twitter to support this view, so here we go.

Amazon has created its dominant position by providing customers with what they want: (almost) any book, at a ridiculously low price, delivered rapidly. The deep discounting that Amazon is able to support attracts buyers who sense a bargain and is often quoted as the reason, along with the Kindle, that it dominates the book e-tailing market. However Amazon has problems and they are not trivial.

Amazon’s reviews system is fundamentally broken and whilst that might seem like an issue that troubles only those of us in the industry who pay attention to these things, it isn’t. As book reviews become more and more unreliable, so more and more buyers will start to get frustrated that they aren’t getting what they were expected and will start looking for reviews elsewhere. That will habituate them to looking outside Amazon for information on books and bring Amazon’s position as the canonical reference for books under threat.

JK Rowling Image credit: Getty Images via @daylife

Google Books is a great resource and makes it very easy for readers to sample a vast number of books before making a purchase decision. Google also provides links to a variety of retailers as well as helping people find book in libraries or local bookshops. As a destination for people who want to link to a generic book page, Google Books is actually more helpful than an Amazon page.

For book bloggers who want to earn a bit on the side from affiliate sales, Amazon isn’t the only option, so there is no advantage for them to link to Amazon alone. Better to link to all retailers with affiliate links so that your readers can buy from wherever they choose and you get a kickback regardless of their preferences.

Amazon may still be at the top of the tree in terms of market share, but it’s there because people are in the habit of linking to and going to Amazon, not because of any inherent advantage in doing so. That habit is being eroded, slowly but surely.

JK Rowling’s Pottermore, for example, is chipping away at Amazon’s position, not because it directly competes but because it proves to people that Amazon is not the only game in town. Want to buy a JK Rowling book? Pottermore is the place to go. What happens when more big name authors decide that they want what JK Rowling’s got? Especially as what she’s got isn’t just her own site and infrastructure, it’s her customers’ data.

Anyone who understands the importance of data understands how badly Amazon fails publishers. Want to know how someone found your book on Amazon? Not a hope. Want to know if your Twitter promo campaign is working? No chance. Want to know where your buyers are? You’ll never find out. Data is gold. Amazon provides iron pyrites. How long are publishers going to carry on sacrificing data on the alter of Amazon’s reach?

Indeed, Amazon actually prevents self- and traditional publishers from innovating. If they want to bundle an ebook with the paperback, they can’t do that through Amazon. If they want to provide extras, cross-sell, up-sell, or invite buyers onto their mailing list, they can’t do that through Amazon. If they want to forge a direct relationship with their customers or create a community they have to move away from their reliance on Amazon. It is simply impossible to innovate at the point of sale if you do not control it.

Can Amazon be sure to maintain its dominant position purely through its catalogue, reach and discount? Is that really enough for keep it secure?

My feeling is that no, in the long term that is not enough. Whilst I don’t anticipate any sort of overnight coup d’état, there are start-ups with the potential to nibble away at Amazon’s dominance over the next 12 months.

Publit is one, and I wrote about them the other week. What they offer is not only distribution to the main retailers but also the opportunity to run your own web shop. That means data and the potential to do all that retail innovation that Amazon prevents. For publishers, self- and traditional, that’s a fantastic opportunity.

Think about this: These days, authors have to do a lot of their own promotional work. Contrary to popular belief, just chucking a book on Amazon doesn’t mean that it’s going to get found and bought. And that’s especially true for new entrants with no reviews, no or low sales, and a price below £2.49. You have to promote, and promote hard. Doesn’t matter if you’re self-published or an author with a traditional publishing house, at some point you have to reach out to your audience and say, “Here is where to buy my stuff”.

That means you can choose where to send them. Will you link to Amazon, where your sale goes into a data black hole, or will you send them to your own webshop, or your publisher’s, where that information can be captured and you can provide a few little extras to keep your readers sweet?

A good example of the choice that publishers need to make is the one that the Financial Times newspaper made. The FT decided that their iOS app data and their relationships with their readers was so valuable to them that they were not willing to let Apple get in their way. Better to lose a few subscriptions but gain data and flexibility.

Book publishers need to think about that, although with start-ups like Publit, it’s not actually an either/or decision, because you can both sell through Amazon, retaining scale, and sell through your own shop, retaining data. You can choose what to promote and if your own shop turns out to be more valuable in the long term, then you can decide to ditch Amazon if you want to.

If the big publishers decided to be more flexible around even just ebooks, there’s every possibility that over the next few years such tactics could seriously erode Amazon’s position. It’s not agency pricing the publishers need, it’s the balls to play a long game.

Whenever there’s a huge, established player dominating a market, there will always be little companies snapping at its heels, but frequently they never manage to take a significant bite. But there’s more than that going on in this case. Amazon has lost sight of how the market is changing and treats both its suppliers and its customers with disdain, which opens the door to new players who can and do provide what Amazon could but won’t.

Amazon now risks exactly the same disintermediation that it perpetrated a decade ago. It won’t happen overnight, but there’s every possibility that all these factors, and more, will come together to change the publishing landscape once again. Question is, how fast is that change going to happen?